Jio to raise Rs 20K cr through rights issue

Source: The Hitavada Date: 21 Jul 2017 11:24:38

NEW DELHI,

July 20,

(PTI),

RELIANCE Jio Infocomm Ltd, the closely held telecom arm of Mukesh Ambani-led Reliance Industries, on Thursday said that it planned to raise Rs 20,000 crore from a rights offer. After plowing a little less than Rs 2 lakh crore into starting a national fourth-generation mobile network, the fresh round of funding will help Jio challenge competitors with its free-for-life voice calls and dirt-cheap data services. Jio is offering 400 crore non-cumulative optionally convertible preference shares (OCPS) at Rs 50 each to RIL, according to a stock exchange filing.

With this latest infusion, RIL’s total investment in Jio will reach over Rs 2.1 lakh crore. “The amount subscribed/paid on each OCPS shall be either redeemed at Rs 50 or converted into five equity shares of Rs 10 each at any time at the option of the company, but not later than 10 years from the date of allotment of the OCPS,” it said.The company had said in January that it would raise Rs 30,000 crore to expand coverage and increase network capacity.

Last month, parent Reliance Industries outlined plans to raise Rs 25,000 crore through privately placed debentures, as the energy-to-retail conglomerate seeks to replace existing high-cost borrowings and build a warchest for an aggressive expansion strategy in the telecom space. The special resolution is listed on the agenda of the 40th Annual General Meeting of RIL to be held tomorrow. Reliance Jio launched its 4G service commercially on Sept 5, 2016 offering free data and voice services and crossed 50 million subscribers in just 83 days, and 100 million in 170 days, adding an average 6 lakh subscribers per day.

The company started charging for mobile services from April 1 but continues to offer aggressive data rates and free voice calls. In fact, established telecom players have blamed Jio’s free voice and data offering for the financial woes of the sector. The incumbents claim their revenue and operating profits have come under severe pressure, primarily as they have been forced to match aggressive offerings of Jio with deep pockets.